Sustained US freight volatility poses new automotive supply chain concern

A number of factors are conspiring to encourage rising US freight prices, which could impact the automotive supply chain.

Limited truck driver availability, the introduction of a new Electronic Logging Devices (ELD) mandate, and the ramping up of vehicle production due to an improving US economy and the recovery from natural disasters that impacted the country, are all placing increasing strain on existing infrastructure. 

Resultantly, January 2018 was one of the tightest capacity markets on record for truck cargo, and led to increased utilisation of emergency logistics services. Such expertise has been able to safeguard automotive industry production by ensuring just-in-time delivery of crucial shipments and supply chain continuity.

Industry strains

“Tonnage requirement is up in 2018, while the number of truck drivers is down, which has led to a disparity between loads and available drivers,” explained Brad Brennan, Managing Director of emergency logistics expert Evolution Time Critical, which operates a control centre in Atlanta, Georgia. “We have worked with a number of US-based carmakers and Tier suppliers to sustain production during a testing period. Manufacturers cannot afford to rely on turbulent supply, so are seeking a solution that guarantees on-time delivery.

Low truck supply and high freight demand has been exacerbated by too few drivers resulting from a high proportion of retirements and a perceived low wage. The new ELD mandate, which strictly controls driver hours and freight movement availability, has also placed added strain on the industry, and posed additional issues for smaller fleet operators required to invest in expensive hardware – another factor influencing a rise in the cost of freight.

A growing role for emergency logistics

“Vehicle production and freight requirement is forecast to remain stable in the coming months, which is driving the need for manufacturers to find a robust method of ensuring on-time shipment,” concluded Mr Brennan. “Working with a multi-modal emergency logistics partner provides added visibility of supply and ensures swift alignment of an optimal solution when required.”

Evolution Time Critical – a Metro Supply Chain Group company – is the world’s leading specialist in emergency logistics for the automotive industry. 

Increasingly, Evolution has found that emergency logistics is playing an integral role in lean strategies as the automotive industry returns to higher production volumes, allowing further inventory reductions while maintaining the reliability of deliveries to manufacturing plants.

The expertise and techniques developed by Evolution for the automotive sector are also benefiting the aerospace and marine industries, where the company helps clients to release capital trapped in spare parts by facilitating urgent parts deliveries, and return aircraft and ships to service more quickly.